CFPB Action Regarding Allegedly Unfair Billing of Credit Card Add-on Products and Services

by Alex Johnson 0

Credit monitoring services are a land office business these days. With consumer anxiety over retailer and government data breaches running high, it’s no surprise that there is a thriving market for services designed to monitor and prevent credit identity fraud.

It should also come as no surprise that this booming market has attracted the attention of the CFPB, which is actively looking for any potential bad actors taking advantage of the situation:

“On July 1, 2015, the Consumer Financial Protection Bureau (“CFPB”) filed complaints and proposed consent orders against two credit card add-on product vendors – Affinion Group Holdings, Inc. (and its affiliated companies) and Intersections Inc. – for allegedly unfairly charging consumers for credit card add-on benefits they did not receive, which is in violation of sections 1031 and 1036 of the Consumer Financial Protection Act of 2010 (“CFPA”), 12 U.S.C. §§ 5531(a), 5536(a)(1). If approved by the courts, the consent orders provide that Affinion will pay approximately $6.8 million in monetary relief to eligible consumers and $1.9 million in civil money penalties, while Intersections will pay approximately $55,000 in monetary relief to eligible consumers and $1.2 million in civil money penalties. Both consent orders also provide that the add-on vendors will end any unfair billing practices and submit to compliance monitoring by the CFPB.”

“The CFPB’s actions against Affinion and Intersections indicate that the agency is scrutinizing the relationships between add-on vendors and financial institutions to ensure that consumers receive the benefits promised by such products, that consumers are not misled about the products themselves, and that vendors are responsive to any consumer demand to cancel the products.”

Overview by Alex Johnson, Sr. Analyst, Credit Advisory Service at Mercator Advisory Group

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